Business Decision Making: NPV, Payback Period, Financial and Non-Financial Factors

BUSINESS DECISION-
MAKING

Table of Contents
INTRODUCTION...........................................................................................................................3
MAIN BODY...................................................................................................................................3
Payback period.............................................................................................................................3
Net present value..........................................................................................................................5
Financial and non-financial factors..............................................................................................6
CONCLUSION................................................................................................................................7
REFERENCES................................................................................................................................1

INTRODUCTION
Business decision is one of the important aspect with regard to any company. As there are
many alternatives with regard to business operations so choosing the most suitable and
appropriate option is counted under business decision-making (Kimmel, Weygandt and Kieso,
2018). This report covers the concept of NPV and Payback period along with other financial and
non financial aspect in the context of two projects.
MAIN BODY
Payback period
It is an important aspect with regard to project selection. It shows the time period under
which the initial investment will be recovered and company will start earning. This means the
exact number of years and months can be calculated with this concept (Messer, 2020). It is to be
noted here that it always need to be low because more early the investment will be recovered,
more earning can be earned by company.
In case of:
Project A Bags:
Initial Investment: 180000
Year
Cash in-
flows Cumulative cash inflows
1 48000 48000
2 62000 110000
3 85000 195000
4 100000 295000
5 110000 405000
Notes:
Cumulative cash flow:
1 year= 48000
2 year = 48000+62000
= 110000
and so on.